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Monday, June 27, 2011

Tips On Tenancy Deposit Disputes 47: Disputes and the AST

Tip 47: Specify What The Deposit Is For In The Tenancy Agreement

Landlords don’t always give a lot thought to the wording of their tenancy agreements. Most seem to the same old agreement they’ve been using for years, some download copies from the landlord association they belong to, and some buy a generic agreement off the shelf.

Each tenancy is different, and you really should check through your agreement every time you re-let the property or the tenant re-signs, to make sure that the agreement properly reflects your needs. One of the key things to look at is the clause that deals with permissible deductions from the deposit. Usually very near the beginning of the agreement, this is the section that sets out what the deposit may or may not be used for, and is one of the first places the adjudicator will look to see whether your claim is valid.

Many tenancy agreements state that the deposit may be retained by the landlord to pay for repairs to damage to the property caused by the tenant which is in excess of fair wear and tear. This sounds good on the face of it, but what if:
  1. The tenant didn’t cause the damage, a visitor did.
  2. The landlord wants to retain money for cleaning.
  3. The landlord wants to retain money for rent areas.
  4. The landlord doesn’t intend to repair an item straight away, for example a chipped worktop, but wants to claim for compensation.
  5. The landlord wants to claim for loss of rental income while the property was being repaired.
Shouldn’t the landlord be entitled to claim in those circumstances? Of course they should, but if the contract doesn’t allow for it because it is sloppily drafted, then the claim will not succeed. A signed contract is assumed to be an accurate reflection of the wishes of the parties, and you can’t just go adding obligations after the agreement has started. A court or adjudicator will enforce the contract as it is written unless there are compelling reasons not to (see post on Unfair Terms, for example).

Contrary to popular opinion, there is no magic to drafting contracts, you just need to be really pedantic and ask what is the literal meaning of the words on the page. You should be able to work out for yourself if the contract covers the claims over the deposit that you need, but if you are in doubt, obtaining the advice of a trusted solicitor is usually money well spent.

Tom Derrett is the Principal of Deposit Claim, an ex-adjudicator and an expert on the Deposit Protection Schemes. Tom helps landlords to claim money through the deposit protection schemes.

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